Bharat Heavy Electricals Ltd.

February 23, 1983 Bharat Heavy Electricals Ltd. Integrated Office Complex (Behind Lodhi Hotel) Lodhi Road, New Delhi - 110 003 India Attention : Mr . S . Malik Project Manager Gentlemen: This refers to your letter dated January 19, 1983, requesting that Bharat Heavy Chemicals Ltd., a foreign corporation organized and existing under the laws of India, be exempted from the licensing requirement under Title XV of the Corporation Code of the Philippines. It appears therein that Bharat Heavy Electricals Ltd. has been awarded a contract by the National Power Corporation (NPC) of the Philippines for supply, erection and commissioning of the equipment for switchyard operation of a hydro-electric project under execution in Mindanao Region of the Philippines, which project is allegedly financed by the Asian Development Bank (ADB). It is your contention that the act being performed by said foreign corporation is a mere isolated transaction, thus the present request. Anent thereto, please be informed that under Section 123 of the Corporation Code of the Philippines: a foreign corporation shall have the right to transact business in the Philippines after it shall have obtained a license to do business in the country in accordance with the Code and a Certificate of Authority from the appropriate government agency. In connection with the license being issued by the Commission, we believe that a foreign corporation is deemed not doing business in the Philippines within the meaning of our statute and consequently be exempted therefrom if its commercial dealing is limited to a single or isolated transaction and indicates no elements of continuity of conduct in that respect. "Where the corporation enters into a single agreement, or engages in some isolated business act or transaction within a particular state, with no intention to repeat the same or make such state a basis for the conduct of any part of its corporate business, such corporation cannot be said to be doing business or transacting business within the state within the meaning of the usual statutory provisions regulating the transaction of business by foreign corporations." (Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, Vol. 3, pp. 634-635, citing Pacific Micronisian Line, Inc. v. del Rosario, G.R. L-7154, Oct. 23, 1954). Corollary thereto, Section 1(g), Rule 1 of the Rules and Regulations to Implement Presidential Decree No. 1789, otherwise known as the Omnibus Investments Code provides that the following acts by themselves shall not be deemed doing business in the Philippines: xxx xxx xxx (4) Performing services auxiliary to an existing isolated contract of sale, such as installing in the Philippines machinery it has manufactured or exported to the Philippines, servicing the same, training domestic workers to operate it and similar services." Subject to the foregoing provisions and rulings, Bharat Heavy Electricals Ltd. may be exempted from the licensing requirement of this Commission as regard foreign corporations. LexLib Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner